PE 3 1A Page 131 Indicate with a Yes or No whether or not each of the following accounts normally requires an adjusted entry.

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1 PE 3 1A Page 131 Indicate with a Yes or No whether or not each of the following accounts normally requires an adjusted entry. A. Accumulated Depreciation yes B. Albert Stucky, Drawings No C. Office equipment No D. Salaries payable Yes E. Supplies yes F. unearned Rent Yes PE 3 1B Page 131 Indicate with a Yes or No whether or not each of the following accounts normally requires an adjusted entry. A. Building No B. Cash No C. Interest Expense Yes D. Miscellaneous Expense No E. Pam Ingersoll, Capital No F. prepaid Insurance Yes PE 3 2A Page 131 Classify the following items as (1) Prepaid expense, (2) Unearned revenue, (3) Accrued revenue, (4) Accrued expense. A. Cash received for services not yet rendered 2 B. Insurance paid 1 C. Rent revenues earned but not received 3 D. Salaries owned but not yet paid 4 1

2 PE 3 2B Page 131 Classify the following items as (1) Prepaid expense, (2) Unearned revenue, (3) Accrued revenue, (4) Accrued expense. A. cash received for use of land next month 2 B. Fees earned but not received 3 C. Rent expense owned but not yet paid 4 D. Supplies on hand 1 PE 3 7A Page 132 The estimated amount of depreciation on equipment for the current year is $ Journalize the adjusting entry to record the depreciation. Dec. 31 Depreciation Expense Accumulated Depreciation Equipment PE 3 4A Page 131 The balance in the unearned fees account, before adjustment at the end of the year, is $ Journalize the adjusting entry required assuming the amount of unearned fees at the end of the year is $ Dec. 31 Unearned fees Fees earned Fees earned ($178,900 $18,650). 2

3 PE 3 5A Page 131 At the end of the current year, $ of fees have been earned but not been billed to clients. Journalize the adjusting entry to record the accrued fees. Dec. 31 Accounts Receivable Fees earned EX 3 1 Page 133 Classify the following items as (A) Prepaid expense, (B) Unearned revenue, (C) Accrued revenue, (D) Accrued expense. 1. A three-year premium paid on a fire insurance policy. A 2. Fees earned but not yet received. C 3. Fees received but not yet earned. B 4. Salary owed but not yet paid. D 5. Subscription received in advance by a magazine publisher. B 6. Supplies on hand. A 7. Taxes owed but payable in following period. D 8. Utilities owed but not yet paid. D 3

4 PR 3 1A Page 138 On August 31, 2010, the following data were accumulated to assist the accountant in preparing the adjusting entries for Cobalt Realty: A. Fees accrued but unbilled at August 31 are $ B. The supplies account balance on August 31 is # The supplies on hand at August 31 are $900. C. Wages accrued but not paid at August 31 are $ D. The unearned rent account balance at August 31 is $9.375, representing the receipt of an advance payment on August 1 of three months rent from tenants. E. Depreciation of office equipment is $ Instruction: 1. Journalize the adjusting entries required at August 31, Solution: Date Description Debit Credit A B C D E Accounts Receivable Fees Earned Accrued fees earned Supplies Expense Supplies Supplies used ($3,150 $900) Wages Expense Wages Payable Accrued wages Unearned Rent Rent Revenue Rent earned ($9,375/3) Depreciation Expense Accumulated Depreciation Equipment Depreciation expense 9,560 2,250 1,200 3,125 1,600 9,560 2,250 1,200 3,125 1,600 4

5 PR 3 5A Page 140 Jacksonville Financial Services Co, which specialize in appliance repair services, is owned and operated by Cindy Latty. Jacksonville Financial Services Co, accounting clerk prepared the unadjusted trial balance at December 31, 2010, show at the top of the next page. Jacksonville Financial Services Co Unadjusted Trial Balance December 31, 2010 Debit Balance Credit Balance Cash Accounts Receivable Prepaid Insurance Supplies Land Building Accumulated Depreciation- Building Equipment Accumulated Depreciation- Equipment Accounts payable Unearned Rent Cindy Latty, Capital Cindy Latty, Drawing Fees Earned Salaries and Wages Expense Utilities Expense Advertising Expense Repairs Expense Miscellaneous Expense

6 The data needed to determine year-end adjustments are as follows: A. Depreciation of building for the year, $ B. Depreciation of equipment for the year, $ C. Accrued salaries and wages at December 31, $800. D. Unexpired insurance at December 31, $ E. Fees earned but unbilled on December 31, $ F. Supplies on hand at December 31, $600. G. Rent unearned at December 31, $ Instruction: 1. Journalize the adjusting entries. Add additional accounts as needed. 2. Determined the balance of the accounts affected by the adjusting entries and prepare an adjusted trial balance. 6

7 Solution: 1. Date Description Debit Credit A B C D E F G Depreciation Expense Building Accumulated Depreciation Building Building depreciation Depreciation Expense Equipment Accumulated Depreciation Equipment Equipment depreciation Salaries and Wages Expense Salaries and Wages Payable Accrued salaries and wages Insurance Expense Prepaid Insurance Insurance expired ($6,000 $1,500) Accounts Receivable Fees Earned Accrued fees earned Supplies Expense Supplies Supplies used ($1,725 $600) Unearned Rent Rent Revenue Rent earned ($3,600 $1,500) 2,100 3, ,500 2,150 1,125 2,100 2,100 3, ,500 2,150 1,125 2,100 7

8 2. Jacksonville Financial Services Co Adjusted Trial Balance December 31, 2010 Debit Balance Credit Balance Cash Accounts Receivable Prepaid Insurance Supplies 600 Land Building Accumulated Depreciation- Building Equipment Accumulated Depreciation- Equipment Accounts payable Salaries and Wages Payable 800 Unearned Rent Cindy Latty, Capital Cindy Latty, Drawing Fees Earned 160,750 Rent Revenue 2,100 Salaries and Wages Expense 57,650 Utilities Expense Advertising Expense Repairs Expense Insurance Expense 4,500 Depreciation Expense Equipment 3,000 Depreciation Expense Building 2,100 Supplies Expense 1,125 Miscellaneous Expense , ,050 8

Chapter 3 the Adjusting Process. Learning Objective 1 Describe the nature of the adjusting process.

1 Chapter 3 Adjusting Process Chapter 3 the Adjusting Process Learning Objective 1 Describe the nature of the adjusting process. Nature of the Adjusting Process General concept: revenues are earned when